Mia has an investment that is worth $12,000 after 4 years. If the initial investment was $8,000, what is the annual simple interest rate?

Answer: 12.5 %

Explanation:

Hi, to answer this question we have to apply the simple interest formula:

I = p x r x t

Where:

I = interest (investment after interests - principal; 12000-8000=4000)

P = Principal Amount (initial invest)

r = Interest Rate (decimal form)

t = time

Replacing with the values given

4,000 = 8,000 (x) 4

Solving for x:

4,000 = 32,000x

4,000 / 32,000 = x

x = 0.125

Since the interest rate is in decimal form, we have to multiply it by 100 to obtain the percentage.

0.125 x 100 = 12.5 %

Feel free to ask for more if needed or if you did not understand something.